Rupert Murdoch’s 21st Century Fox is involved in on-off talks with Walt Disney

As if Hollywood didn’t have enough on its plate with sexual assault allegations against Harvey Weinstein, Kevin Spacey et al, it is also facing a potentially far more serious challenge.

Exponential growth at disrupters Netflix and Amazon, and growing interest among the Silicon Valley giants in creative and news content, is sparking merger frenzy.

The movie industry is as worried now as it was in 2004 when Google went public, with the movie moguls and recording companies fearing intellectual property could be destroyed by piracy.

Creative industries survived, although some content producers, such as Britain’s EMI, ended up being absorbed by bigger players. Now the same saga is playing out again and there is strong British interest.

The disclosure that Rupert Murdoch’s 21st Century Fox is involved in on-off talks with Walt Disney has unleashed speculation about fissures in the Murdoch dynasty and the impact on Sky.

Fox has been struggling with UK regulators for almost a year as James Murdoch seeks to orchestrate a buy-out of the 61 per cent of the British satellite broadcaster that the company doesn’t already own.

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In a similar space, US telecoms group AT&T finds itself in a regulatory fix over its attempt to merge with Time Warner, which owns a bunch of cable and satellite broadcasters, including HBO and the grand-daddy of 24-hour news channels, CNN.

The latter is the bête noire of President Trump who regards it as the home of ‘fake news’, leading to charges that the White House has injected itself into the process.

At the core of both deals is the phenomenal rise of streaming.

Mass market television still has its adherents as The Great British Bake Off and Strictly Come Dancing demonstrate.

Exponential growth at disrupters Netflix and Amazon, and growing interest among the Silicon Valley giants in creative and news content, is sparking merger frenzy

But regiments of viewers don’t want to be tied down to scheduled viewing. Streaming allows access to programmes wherever you are and on a variety of devices.

Moreover, much of the big production budgets have shifted from movies and the Hollywood studios. Steven Spielberg, for instance, has signed with Apple to produce dramas for streaming.

In spite of falling earnings for the first time in eight years, Disney’s shares rose in overnight trading. It unveiled plans for three new Star Wars films and pledged the launch of studio-to-consumer streaming, bypassing cable.

Most of us thought it inconceivable that Rupert Murdoch, having built 21st Century Fox from scratch, would ever consider dismantling his empire, throwing dynastic ambitions into question. Even at 86, he remains a good reader of media runes.

James Murdoch – who has been stung by the scandals at Fox and News Corp – could be transferred to Disney in a senior role

Fox is too small to compete with the Silicon Valley giants as they ramp up production budgets. Hiving off its movie studios and quality cable channels such as National Geographic to Disney, along with the Sky stake, would create a powerful challenger to Netflix et al.

There is the strong suggestion that if the deal is done, James Murdoch – who has been stung by the scandals at Fox and News Corp – could be transferred to Disney in a senior role.

The Fox deal for Sky would likely go ahead even if the Competition & Markets Authority insists the news operation is sold.

The Murdoch clan have said they might even be prepared to close Sky News. Fox’s market-leading news operation might be transferred back to News Corporation, with possibly Lachlan Murdoch in charge.

Issues behind the AT&T deal are similar. It has delivery in the shape of mobile and fibre communications, and a huge customer base but it lacks content. Time Warner could provide that.

AT&T would like to hang onto CNN, satellite broadcaster DirecTV (which carries local news channels) as well as the more entertaining stuff including Game Of Thrones

Historically, US anti-trust authorities have been less concerned about vertical takeovers – such as AT&T and Time Warner – than horizontal deals such as Fox-Disney.

But the intervention of new players such as Apple changes that completely. They would provide distribution via streaming as well as content.

The uneven playing field is AT&T’s strongest card in dealing with the US Justice Department.

AT&T would like to hang onto CNN, satellite broadcaster DirecTV (which carries local news channels) as well as the more entertaining stuff including Game Of Thrones and the rights to National Basketball Association matches, America’s most popular TV sport. Any attempt by the authorities to hive-off CNN will be seen as politics and could end up in the courts.

But with every day spent in the regulatory jungle, the streaming threat to traditional production houses, studios and cable channels becomes greater.